ABSTRACT The goal of this research is to define chromatin mechanisms that control gene expression during development. Molecular, genetic, genomic, and biochemical methods will be used to study the Polycomb group (PcG) transcriptional repressors of Drosophila, which provide a premier model for revealing chromatin mechanisms in a developing organism. PcG silencing is performed by multiprotein complexes that selectively occupy genomic sites. The constituents and activities of two PcG complexes, called Polycomb repressive complex 1 (PRC1) and PRC2, are the best-defined. The focus of this work is on PRC2, which is a chromatin- modifying enzyme that methylates histone H3 on lysine 27 (K27). The trimethylated product, H3-K27me3, is a hallmark of transcriptionally silenced chromatin in genomes of higher eukaryotes. The PcG proteins, and the chromatin complexes they form, are highly conserved from flies to humans. Human PcG proteins play key roles in the transcriptional circuitry that controls pluripotency and differentiation of embryonic stem cells. They are also central regulators in adult tissue-specific stem cells, such as in skin, muscle and blood. Overabundance or hyperactivity of PcG proteins is implicated in leukemias and cancers of the breast, prostate, and other tissues. Their expanding importance in stem cell biology and cancer epigenetics underscores the need to understand basic PcG chromatin mechanisms. The main goals of this work are to determine mechanisms of PRC2 function and molecular roles of H3-K27 methylation in gene silencing. PRC2 has four core subunits, three of which are required for histone methyltransferase activity. The subunits contain key regulatory modules, including binding sites that detect chromatin features, that profoundly influence PRC2 activity. One Aim will determine how critical subunit elements, located outside the catalytic center, control PRC2 function in vitro and in vivo. A second Aim defines in vivo consequences of histone methylation at normal sites of PcG silencing and at naive sites not normally impacted by PcG machinery. The methods include loss-of-function and over-expression studies, site-directed mutagenesis, transgene manipulation, chromatin immuneprecipitation, protein purification, enzyme assays, chromosome immunostaining, and targeted genomic modifications. Fulfillment of these Aims should advance knowledge of basic PcG mechanisms in gene silencing and also of epigenetic processes that control human stem cell fates and that underlie certain human cancers.